In recent developments, Nepal is set to make an impactful amendment to its policy on digital currencies. The proposed change would see the 2002 Act amended to allow the country’s Central Bank to create and issue its own digital currencies.
A New Amendment
Nepal has joined the bandwagon as the world takes even more steps forward in digitalization. This act has seen the country’s central bank, the Nepal Rastra Bank take action to review its policy stance on digital currencies. The proposed action is set to revise the Nepal Rastra Bank Act. This revision will see the Act amended to allow the bank to issue its own version of the digital currency. Nepal’s choice to take this step is similar to the one taken by Britain in the recent past.
The change is set to revise the Nepal Rastra Bank (NRB) Act 2002. According to this Act, the central bank only has the mandate to mint currency in the form of paper and coins. Thus, the Nepal Rastra Bank lacks the mandate to mint and issue a digital currency under the pretext. However, an amendment was proposed due to the shift in global values and attitude on cryptos by governments.
Spearheaded by Revati Nepal, chief of the currency management department at the central bank, a bill is being drafted. According to Revati, the bill’s formulation is in the early stages. The drafting is led by a task force formed by the central bank. The task force is slated to send the completed bill to the government. The government will then table it in parliament once the bill’s consultation process is completed.
As things stand, the central bank has already kick-started a study before issuing the digital currency in the country. This study will explore all important facets related to the creation and distribution of the digital currency. The information obtained will then be used to manage the creation and distribution process that follows. For instance, according to Revati, reports obtained showcase that the action to create and manage the currency is feasible. As a result, proposed actions include legal provisions authorizing the central bank to create and manage the currency.
What We Know About The Proposed Currency
Typically, the term digital currency refers to an accepted medium of exchange equivalent to the country’s inherent legal tender. However, the only difference lies in the form the currency takes: While the normal currency is typically issued in coins and banknotes, the digital currency takes on an electronic form. As evident in this case, the proposed action will see the Nepal Rastra Bank mint a digital currency. This currency’s worth will be equal to the Nepalese rupee.
As also reported by Mr Revati, the issuance of this currency will require the NRB to prepare a native digital wallet. The wallet will then officially be the preferred method of holding the digital currency. However, as stated, the process is still in its early phases. Thus, the NRB board has suggested that patience be observed as there still remain many issues and factors to consider.